Well it’s been almost 6 years since my last update, which is quite mind boggling to consider but no reason to put off any further.
For the past 6 years the fund has entered passive mode making long term investments within our core thesis around microchips. Given our early entry and repeated long call purchasing around NVDA and other chip makers, as you can imagine the strategy has gone quite well.
While there have been some down market trends to navigate, we’ve generally remained in one of the longest and most bullish runs of all time, so I don’t feel that the fund has been adaquately tested in bear market backdrops. We still have that to prove, but for now a mostly passive and long term strategy has continued to pay dividends.
I’ll post again shortly with a deeper dive into my market outlook but for now I’ll say as I have said for the last decade; keep an eye on the balance sheet and deficit. The trends and rate of change in our balance sheet runoff are more or less directly correlated to the market performance, more so even than our rate of change in interest rates. Stay focused on that which will continue to be the largest driver of inflationary pressure. CPI is all but useless to me at this point. With removed debt service and consistently manipulated energy costs, it feels like a political tool more than a technical one. I have my own model for consumer pricing that gathers a modest amount of first hand sources, and as many know, the reality is much worse than CPI ever displayed.
I’m also keeping an eye on Lina Khan and the moves from up top because we have an M&A market that’s ready to explode if the pressure comes off even slightly. I think there are players like SNAP and EA that are going to become highly attractive targets very quickly, so I’m evaluating option plays around those timed with fundamental updates from Khan’s office.
Unlike prior elections I don’t think either candidate will have a major influence on market moves right out of the gate, so I’m unconcerned with the political aspect of the market for now.
I’ll be back with a deeper dive soon.
